Müller raises November milk prices

By Jim Cornall contact

- Last updated on GMT

Müller has increased the price it pays farmers for milk, as well as outlined plans for growth in the dairy sector by 2020.
Müller has increased the price it pays farmers for milk, as well as outlined plans for growth in the dairy sector by 2020.

Related tags: Milk

Müller has raised its UK average milk price by 1.5ppl (2 cents), giving a contract price of 20.94ppl (26.8 cents).

In addition Müller non-aligned dairy farmers will benefit from a retailer supplement, estimated to be an additional 2ppl (2.6 cents) for November.

The combination of the two separate payments means Müller non-aligned producers will see returns of close to 23ppl (29.3 cents) for the month.

The company said that the November increase will also see the completion of the price harmonization process for Müller’s two farmer groups following a request from the MMG Farmer Board.

Lyndsay Chapman, agriculture director for Müller Milk & Ingredients said that the company will continue to reflect improved returns but stressed that “in a challenging commercial and retail environment we must be competitive in comparison to other organizations who offer their farmers different levels of milk price returns, or choose to retain rather than pass on the extra supplements they are receiving from retailers.”

Looking to category growth

The move comes after Müller said that dairy has the potential to be the grocery sector’s engine for growth for the foreseeable future.

Müller is preparing to outline plans for £700m ($894m) of category growth in the sector by 2020.

The company said it will invest a further £100m ($128m) above normal planned expenditure in its operational, innovation and marketing capabilities over the next 18 months.

Capital projects will include installing new filling lines and further upgrading the capacity and capabilities of existing production facilities at its Müller Yogurt & Desserts and Müller Milk & Ingredients businesses.

 Müller Group chief executive Ronald Kers said that the Müller brand is already ahead of Coca-Cola and Cadbury’s Dairy Milk in the top 10 most purchased fast moving consumer goods brands in the UK, with 207m purchases.

Chilled yogurt and desserts

Bill Mathieson, commercial director at Müller Yogurt & Desserts said that the company sees opportunities across the category from health to indulgence.

The chilled yogurt and potted dessert (CYPD) category is worth £2.6bn ($3.3bn), bigger than biscuits, crisps and ice-cream. 96.2% of the population buy into the category on average 40 times a year.

There is significant potential to introduce new and innovative formats, he said, as well as to increase the number of shopping points in stores.

The company said it will ensure that its products for children capitalise on macro health trends, in particular sugar reduction and leveraging ‘dairy goodness.’

Fresh milk, cream and milk drinks

The company says that better shopper and consumer understanding coupled with new investment in improving the capabilities of Müller’s fresh milk, cream and milk drinks business could unlock category growth of £470m ($600m) by 2020.  

Dan Howell, commercial director of Müller Milk & Ingredients (MMI), said that the category is currently valued at £3.3bn ($4.2bn), but declining in value by 2% year-on-year.

He said the company can increase the size of the category in 2020 by up to 14% compared to its current value.

Müller says it has identified trends within the category to drive growth. Milk drinks are defying the trend, the company says, with 3.7% growth, and by utilizing the FRijj brand, believes it can reach new consumers.

“Over the next few months we will be revealing full category visions for each of the liquid dairy categories; fresh milk, cream, and milk drinks,”​ Howell said.

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